Medicare drug coverage gap made easy

Let's talk Medicare Part D, the drug benefit. Medicare can be confusing; with so many regulations and rules in place to protect the plans and the patients, you can get lost fast. We help explain coverage just a little bit better in this easy go-to guide for Medicare Part D, your prescription drug plan.

Coverage gap limits

Every Medicare plan follows the same basic set of rules to even the playing field for those patients shopping for a drug plan. One major misconception is that the coverage gap, otherwise known as the donut hole, does not apply to some prescription plans or that it differs from plan to plan. Wrong. The coverage gap is, in short, a prescription allowance as set by the Center for Medicare and Medicaid Services(CMS). Each year, the allowance is set by CMS and applies to all Medicare drug plans. As of 2016, the limit is $3310. This limit means that the total cost of the prescriptions, both what the patient pays and what the plan pays, applies toward your limit. Staying within these limits means that your normal copayment applies for your prescriptions. If you normally pay $30 per month for a medication, it will continue to be $30 per month until you exceed the coverage gap limitations.

Copayments

Now let's say that you have fallen ill this year and you have exceeded that $3310. What happens now? Once you have exceeded the limit, you fall into the coverage gap. Inside the coverage gap, instead of ordinary copays, you will now be paying a certain percentage of the total drug cost in place of your copayments. The percentages are also set each year by CMS; the 2016 limit is 45% for brand name medications and 58% for generic medications. Broken down, it goes like this: You have a prescription for Abilify 5mg tablets that normally cost you $30 per month. Since this is a higher cost medication, it exceeds your limits quickly and you're now into the coverage gap. Example: a one month supply of Abilify 5mg has a total cost of $1,000. You're now paying 45% of that $1,000 for a grand total of $450.

Catastrophic coverage

With higher cost medications, those dollars start adding up quickly. The last stage of coverage occurs when your true out-of-pocket costs (this is the amount you spend on medications throughout the year) reach the catastrophic limit. For 2016 that limit is $4,850. Once you reach catastrophic coverage, all of your medication costs change once again. For catastrophic coverage, the copayment now becomes $2.95 for generic, $7.40 for brand medications, or 5%, whichever is greater.

Excluded drugs

An important note for Medicare beneficiaries is that some drugs simply cannot be covered due to regulations. Medicare has a list of categories of drugs that cannot be covered under any Medicare plan. Some examples include vitamin and mineral supplements (with the exception of fluoride and prenatal vitamins), medications used for sexual dysfunction, medications used for cosmetic purposes and hair loss, medications used for weight gain or weight loss, and medications used for an indication not FDA-approved or supported by medical compendium. Some prescription drug plans have a supplemental benefit coverage, in which the plan allows for a limited number of certain excluded medications.

Medicare Part B versus Medicare Part D

While medications taken at home are almost always covered under Medicare Part D, it is important to note that in certain instances, medications will be covered under the medical benefit. Medications used to prevent organ rejection are covered under Medicare Part B if the transplant was covered in part or whole by Medicare. Nausea medications used for chemotherapy-induced nausea and vomiting are covered by either B or D depending on whether other medications are used during chemotherapy to prevent nausea. Nebulizer solutions are paid for under Part B unless the patient is in a long-term care facility. While the list of exceptions and circumstances could fill a Herman Melville novel, your Medicare plan will be able to assist you with your specific questions and health needs.

While Medicare can be confusing, it does not have to be. Take control of your health; ask questions if you're not sure. Your Medicare plan will be more than willing and able to help clear up any questions you may have or explain anything you're just not quite sure of. Keep your health in your hands.